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End of the road for BrisConnections

TIM PALMER: The company that owns and operates Brisbane's Airport Link toll road has been taken over by its banks.

BrisConnections went into receivership earlier today after negotiations with its lenders which include ANZ and European banks, fell through.

The company has debts of more than $3 billion.

Here's finance reporter, Sue Lannin.

SUE LANNIN: BrisConnections opened with great fanfare in the middle of last year.

The long-delayed $5-billion project linked Brisbane's airport with the city and suburbs, halving travel time.

But the use of the tunnel never met the optimistic expectations, as the ABC's Annie Guest found out back in October.

MAN 1: Oh, it's very convenient.

ANNIE GUEST: Will you still use it when prices rise over the next 15 months to $4.97?

MAN 1: I probably will, yes.

MAN 2: Probably not. I've got a philosophical objection to tolls.

SUE LANNIN: In November, BrisConnections, the company that owns and operates the Airport Link, was suspended from trade on the Australian Stock Exchange as its management tried to work out a deal with lenders.

Now BrisConnections has been taken over by bank-appointed receivers PPB Advisory with debts of more than $3 billion.

Legg Mason senior research analyst, Andrew Chambers, predicted the company would go under back in November.

ANDREW CHAMBERS: The original prospectus forecast always appeared quite aggressive to us, and then when the toll went on late last year and traffic fell, it became pretty obvious that when they were going to put up the toll towards the intended levels that there was no way that they were going to get the strong traffic growth that they required to make it successful.

SUE LANNIN: The receiver, PPB Advisory, says that BrisConnections has debts of more than $3 billion.

What are they likely to do with the company?

ANDREW CHAMBERS: We would value the group on a lot less than that $3 billion debt number - in fact, very substantially less, so we would see the banks being required to take a haircut in any transaction, and I would guess the receivers would follow a similar process to what we saw in the various Sydney tunnels that struggled, whereby they'll put it up for sale and take a haircut on the way out.

SUE LANNIN: Any estimate of what sort of haircut the banks are going to have to take?

ANDREW CHAMBERS: It'll be billions, but I wouldn't' be more specific than that.

SUE LANNIN: What do you think it's worth at the moment?

ANDREW CHAMBERS: Not a lot, in a simple answer, unless there was a dramatic increase in traffic in coming months.

SUE LANNIN: BrisConnections chairman Trevor Rowe was not available for an interview with 'PM'.

In a statement, he said "the decision to appoint administrators was disappointing".

In a statement, the Queensland Treasurer, Tim Nicholls, said "the appointment of an administrator and receiver is a commercial matter for BrisConnections and its financiers".

He says the state's position is protected through its deeds and Airport Link will remain open to motorists.

Queensland Investment Corporation has a small stake in BrisConnections. Andrew Chambers says the corporation is a potential buyer of the toll road.

ANDREW CHAMBERS: Probably the most likely is QIC (Queensland Investment Corporation), I guess, would look at it given they've got some other assets up in Brisbane.

The market often speculates that Transurban would look, but they've showed no interest in Brisbane so far, and I think they're much less likely to be interested.

And I guess global pension funds will always run the ruler over all of these sorts of infrastructure assets.

SUE LANNIN: So do you think we could see, for example, some of the Canadian pension funds come in?